ATLANTA - Cox Communications, Inc. (NYSE: COX) today reported financial results for the three months ended March 31, 2004.

"We had another remarkable quarter, driven by continued demand for our bundle of video, voice and high-speed Internet services, with revenue growth of 13%, operating income growth of 84% and operating cash flow growth of 18%," said Jim Robbins, President and CEO of Cox Communications, Inc.

"We grew basic video customers 0.8% and total customer relationships 2.1%, each over the first quarter last year, and we ended the quarter with 2.2 million digital cable customers, achieving 35% penetration of our basic video customer base. This steady growth is a direct result of our bundled strategy and deployment of new services such as high-definition television, digital video recorders and Entertainment on Demand, which further strengthen our competitive position."

"We continue to position ourselves for success in a heightened competitive environment by offering a tremendous value proposition, seeking points of sustainable differentiation, and consistently making superior customer service a top priority."

FIRST QUARTER HIGHLIGHTS

For the first quarter of 2004, Cox:

• Ended the quarter with approximately 6.4 million basic video customers, up 0.8% from March 31, 2003.
• Ended the quarter with approximately 6.7 million total customer relationships, up 2.1% from March 31, 2003.
• Ended the quarter with 11.8 million total RGUs, up 12% from March 31, 2003, driven by 29% growth in advanced-service RGUs.
• Added 76,813 Cox Digital Cable customers, ending the quarter with over 2.2 million digital cable customers, representing year-over-year customer growth of 19%. Cox Digital Cable is now available to 99% of the homes in Cox's service areas with 35% penetration of our basic video customer base.
• Added 161,442 high-speed Internet customers, ending the quarter with over 2.1 million high-speed Internet customers, representing year-over-year customer growth of 38%.
• Added 78,959 Cox Digital Telephone customers, ending the quarter with 1.1 million telephone customers, representing year-over-year customer growth of 36%.
• Generated $378.8 million in cash flows provided by operating activities and $84.3 million in free cash flow (cash flows provided by operating activities less capital expenditures).
• Reduced capital expenditures to $294.6 million for the quarter, down 10% from the first quarter of 2003.
• Generated year-over-year revenue growth of 13%.
• Generated year-over-year operating income growth of 84% and operating cash flow (operating income before depreciation and amortization) growth of 18%.

2004 OUTLOOK

Cox expects to achieve its previously stated 2004 financial guidance of revenue growth of 11.5% to 12.5% over 2003, operating cash flow growth of 14% to 15% over 2003, and capital expenditures of approximately $1.35 billion to $1.40 billion. Basic video customer growth over 2003 is expected to be just under 1% and advanced-service RGU net additions are expected to be between 1.0 and 1.1 million. In addition, Cox expects to be free cash flow positive for the full year 2004. Operating cash flow and free cash flow are not financial measures calculated in accordance with accounting principles generally accepted in the United States (GAAP). For more information regarding these non-GAAP financial measures, please refer to the discussion under the heading Use of Operating Cash Flow and Free Cash Flow.

OPERATING RESULTS

Total revenues for the first quarter of 2004 were $1.5 billion, an increase of 13% over the first quarter of 2003. This was primarily due to growth in advanced-service subscriptions (including digital cable, high-speed Internet access and telephony) and higher basic cable rates. An increase in Cox Business Services customers, with customer locations now surpassing 100,000, also contributed to overall revenue growth.

Cost of services, which includes programming costs, other direct costs and field service costs, was $635.8 million for the first quarter of 2004, an increase of 10% over the same period in 2003. Programming costs increased 9% to $317.7 million, reflecting rate increases and customer growth. Other direct costs and field service costs in the aggregate increased 10% to $318.1 million, reflecting 12% growth in basic video customers and advanced-service RGUs over the last twelve months, partially offset by cost savings achieved through successful field service initiatives.

Selling, general and administrative expenses were $337.3 million for the first quarter of 2004, an increase of 10% over the comparable period in 2003. This was due to a 7% increase in general and administrative expenses and a 19% increase in marketing expense. The increase in general and administrative expenses was due to increased salaries and benefits and costs related to trials of new video and telephony products. Marketing expense increased due to additional marketing related to new video products and an industry-wide campaign aimed at satellite competition, as well as a 6% increase in costs associated with Cox Media, Cox's advertising sales business.

Operating income increased 84% to $175.2 million for the first quarter of 2004, and operating cash flow increased 18% to $567.2 million. Operating income margin (operating income as a percentage of revenues) for the first quarter of 2004 was 11%, compared to 7% for the first quarter of 2003. Operating cash flow margin (operating cash flow as a percentage of revenues) was 37% for the first quarter of 2004, compared to 35% for the first quarter of 2003.

Depreciation and amortization increased to $392.1 million from $384.3 million in the first quarter of 2003. This was due to an increase in depreciation from Cox's continuing investment in its broadband network in order to deliver additional services.

In August 2003, Cox terminated a series of prepaid forward contracts accounted for as zero-coupon debt. While these contracts were outstanding, changes in the market value of the Sprint PCS common stock associated with the contracts impacted the gain (loss) on derivative instruments. As a result of the termination of the contracts, the pre-tax loss on derivative instruments for the first quarter of 2004 was insignificant.

For the first quarter of 2003, Cox recorded a $2.5 million pre-tax loss on derivative instruments due to a $4.3 million pre-tax loss resulting from the change in the fair value of Cox's net settleable warrants, partially offset by a $1.6 million pre-tax gain resulting from the change in the fair value of certain derivative instruments embedded in Cox's zero-coupon debt that were indexed to shares of Sprint PCS common stock that Cox owned prior to the net settlement of the zero-coupon debt in August 2003.

Net gain on investments of $26.8 million for the first quarter of 2004 was due to a $19.5 million pre-tax gain on the sale of 0.1 million shares of Sprint PCS preferred stock and a $7.3 million pre-tax gain on the sale of certain other non-strategic investments. The net loss on investments for the comparable period in 2003 of $1.8 million was primarily due to a decline in the fair value of certain investments considered to be other than temporary and a pre-tax loss as a result of the change in market value of Cox's investment in Sprint PCS common stock classified as trading.

Net income for the first quarter of 2004 was $57.7 million compared to net loss of $29.2 million for the first quarter of 2003.

LIQUIDITY AND CAPITAL RESOURCES

Cox has included Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003 as a means of providing more detail regarding the liquidity and capital resources discussion below. In addition, Cox has included a calculation of free cash flow in the Summary of Operating Statistics to provide additional detail regarding a measure of liquidity that Cox believes will be useful to investors in evaluating Cox's financial performance. For further details, please refer to the Summary of Operating Statistics and discussion under the heading Use of Operating Cash Flow and Free Cash Flow.

Significant sources of cash for the three months ended March 31, 2004 consisted primarily of the following:

• the generation of net cash provided by operating activities of approximately $378.8 million;
• the sale of 0.1 million shares of Sprint PCS preferred stock for net proceeds of approximately $56.9 million; and
   
• the sale of certain other non-strategic investments for proceeds of approximately $10.3 million.

Significant uses of cash for the three months ended March 31, 2004 consisted of the following:

• net commercial paper repayments of approximately $155.0 million;
   
• the purchase of $19.0 million aggregate principal amount at maturity of Cox's convertible senior notes due 2021 that had been properly tendered and not withdrawn, for aggregate cash consideration of $13.9 million, which represented the accreted value of the purchased notes and all remaining outstanding convertible notes; and
   
• capital expenditures of $294.6 million. Please refer to the Summary of Operating Statistics for a break out of capital expenditures in accordance with industry guidelines.

At March 31, 2004, Cox had approximately $6.8 billion of outstanding indebtedness. Derivative adjustments in accordance with Statement of Financial Accounting Standards (SFAS) No. 133 have historically had a material impact on reported indebtedness. For example, reported indebtedness at March 31, 2003 of approximately $7.1 billion was net of certain derivative adjustments made in accordance with SFAS No. 133 that reduced the reported debt balance by approximately $1.4 billion. As a result of Cox's purchase of its exchangeable subordinated debentures, net settlement of its zero-coupon debt and sales of Sprint PCS stock during 2003, SFAS No. 133 adjustments did not significantly impact reported indebtedness at March 31, 2004 and are not expected to be material in the future.

USE OF OPERATING CASH FLOW AND FREE CASH FLOW

Operating cash flow and free cash flow are not measures of performance calculated in accordance with GAAP. Operating cash flow is defined as operating income before depreciation and amortization and gain (loss) on the sale of cable systems. Free cash flow is defined as cash provided by operating activities less capital expenditures.

Cox's management believes that presentation of these measures provides useful information to investors regarding Cox's financial position and results of operations. Cox believes that operating cash flow and free cash flow are useful to investors in evaluating its performance because they are commonly used financial analysis tools for measuring and comparing media companies in several areas of liquidity, operating performance and leverage. Both operating cash flow and free cash flow are used to gauge Cox's ability to service long-term debt and other fixed obligations and to fund continued growth with internally generated funds. In addition, management uses operating cash flow to monitor compliance with certain financial covenants in Cox's credit agreements, and it is used as a factor in determining executive compensation.

Operating cash flow and free cash flow should not be considered as alternatives to net income as indicators of Cox's aggregate performance or as alternatives to net cash provided by operating activities as measures of liquidity and may not be comparable to similarly titled measures used by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures on a historical basis are presented under the headings Reconciliation of Operating Cash Flow to Operating Income and Reconciliation of Free Cash Flow to Cash Provided by Operating Activities in the attached financial tables. Cox is unable to reconcile these non-GAAP measures on a forward-looking basis primarily because it is impractical to project the timing of certain transactions, such as the initiation of depreciation relative to network construction projects.

Acerca de Cox Communications

Cox Communications (NYSE: COX), a Fortune 500 company, is a multi-service broadband communications company with approximately 6.7 million total customers, including approximately 6.4 million basic cable subscribers. Cox is the nation's fourth-largest cable television provider, and offers both traditional analog video programming under the Cox Cable brand as well as advanced digital video programming under the Cox Digital Cable brand. Cox provides an array of other communications and entertainment services, including local and long distance telephone under the Cox Digital Telephone brand; high-speed Internet access under the brands Cox High Speed Internet and Cox Express; and commercial voice and data services via Cox Business Services. Local cable advertising, promotional opportunities and production services are sold under the Cox MediaSM brand. Cox is an investor in programming networks including Discovery Channel. More information about Cox Communications can be accessed on the Internet at www.cox.com .

Conference Call and Webcast Details

The Cox Communications earnings call will be held Thursday, April 29, 2004, at 10:30 a.m. Eastern Time. The conference call and an accompanying slide presentation will be webcast simultaneously via the Cox Communications website at www.cox.com/investor. The webcast and accompanying slide presentation, as well as a document containing highlights, will be archived on Cox's website following the conclusion of the call.

Información de contacto

Lacey Lewis, Vice President of Investor Relations
(404) 269-7608, lacey.lewis@cox.com

Bobby Amirshahi, Director of Media Relations
(404) 843-7872, bobby.amirshahi@cox.com

Caution Concerning Forward-Looking Statements

Statements in this release, including statements relating to growth opportunities, revenue and cash flow projections and introduction of new products and services, are "forward-looking statements", as defined by the Private Securities Litigation Reform Act of 1995. These statements relate to Cox's future plans, earnings, objectives, expectations, performance and similar projections, as well as any facts or assumptions underlying these statements or projections. Actual results may differ materially from the results expressed or implied in these forward-looking statements, due to various risks, uncertainties or other factors. These factors include competition within the broadband communications industry, our ability to achieve anticipated subscriber and revenue growth, our success in implementing new services and other operating initiatives, our ability to generate sufficient cash flow to meet our debt service obligations and finance operations, and other risk factors described from time to time in Cox's filings with the Securities and Exchange Commission, including Cox's Annual Report on Form 10-K for the year ended December 31, 2003. Cox assumes no responsibility to update any forward-looking statements as a result of new information, future events or otherwise.